Jeff Carr’s FMC Technologies “End of Year Memo to Law Firms”

As we come to the end of the year, it’s appropriate to both look back and look forward.

Holiday Cheer and Gifts

The FMC Technologies Commitment to Integrity provides that our employees should not accept gifts from any vendor if these could be perceived as creating a conflict of interest. As such, while we appreciate your firm’s generosity, we would much prefer that you support ACC, GCRT, CPR, pro bono or charitable pursuits, or otherwise reduce your costs and overhead.

End of the Year Matters

We place a very high premium on timely submission of invoices. Indeed, that concept is specifically included in the Covenant with Counsel that forms the basis of our B2B relationship. It is important that your billings are fully up to date so that we can close out the year. To that end, please keep the following elements in mind:

Invoices for all 2012 services through November must be posted to Serengeti no later than December 31, 2012. We will not accept invoices for periods prior to December 2012 after that date.

Invoices for services provided in December of 2012 must be posted to Serengeti no later than January 31, 2013. We will not accept invoices for periods prior to January 2013 after that date.

I’ve asked all the attorneys for FMC Technologies to make sure that any and all ACES™ reconciliations for matters closed in 2012 or otherwise due for 2012 activity are communicated, posted to Serengeti and billed no later than December 31, 2012.

If not yet done, annual evaluations and “lessons learned” reviews of all matters closed in 2012 will be conducted by the FMC in-house counsel in short order. Please contact your FMC in-house counterpart, or me, if there is any delay in this important process.

New Requirement to Trigger ACES Payouts

In the spirit of continuous improvement, we recently completed an internal review of our ACES procedures and have made a small but important change in our requirements. We have determined that our outside counsel will need to provide us with a “trigger” for us to initiate our ACES payout procedure. At the completion of a matter, when your firm submits their “final invoice” the invoice must be marked as “FINAL.” In addition, when it is uploaded into Serengeti Tracker, you must include – in the Description/Comments field on the Invoice Summary screen – words to the effect of “This is the final invoice for this matter. Please process the ACES payout for any fees that have been withheld.” This will ensure that we are timely in calculating the ACES payout for all the fees that have been withheld. In the same manner, for annual, general type matters, that do not have a defined end, The last invoice that your firm posts for any given year (which will presumably be posted in December) must also be identified as the “FINAL” invoice for that year, in the same manner as indicated above. We are confident that this new requirement will ensure that all ACES payouts are made in a timely manner. Thank you in advance for satisfying this new requirement.

Billing Rates

FMC Technologies is firmly committed to partnering with our preferred law firms and implementing cutting edge techniques to foster that relationship. We are also committed to finding ways to deliver appropriate legal services better, faster and more cost-effectively to our common customer, FMC Technologies, Inc. This principle is consistent with our commitment to a focus on the value of services rendered and on legal service delivery systems based on efficiency and effectiveness. Your firm’s commitment to these principles is the essential element that qualifies your firm to participate in the FMC Technologies alliance counsel program and is literally why you are part of our high performance team. We understand that your firm must be profitable to remain healthy, but we ask you to focus on profitability through cost reductions and efficiencies as opposed to top line revenue growth. Our industry has changed permanently and is moving towards a relentless focus on value. We believe that by adopting the disciplines inherent in our approach you will be well positioned to benefit as the legal industry changes.

So, if you’ve not already done so, you will probably soon turn to the issue of your firm’s billing rates for 2013. Undoubtedly, many of your clients have adopted policies prohibiting fee increases without approval or are seeking reductions in current fee structures. As you know, to remain true to our partnering relationship, and our performance-based engagement terms, your firm’s rates really don’t matter that much to us. As we’ve undoubtedly discussed before, the fact that you raise rates has absolutely no bearing on the matter budget. Indeed, should a firm raise its rates by 10% we would expect an offsetting gain in efficiency. If you focus on cost reduction and efficiency without sacrificing effectiveness, our ACES program will help grow your firm’s profit margin on our work as well as work you do under similar structures for others.

As you know, we strive to be your most important, but least significant customer. And in that spirit, we hope you’ll take the time to consider these observations as you contemplate the firm’s organizational, financial and compensation structure. As always, we’re more than willing to get together with you at any level — management, practice group, marketing, or young associates – to discuss creative partnering for long term sustainability.

Susan once again is leading the charge. And, as many of us know from involvement with ACC, there are a number of in-house counsel that routinely demonstrate why and how this profession of law can be conducted nobly and fairly for both sides of the client/counsel business relationship. And Jeff is one of those persons. Thanks for sharing.
And for those in small departments in small corporations, we too can offer the same fee arrangements with our outside counsel, establish methods for appropriate reward for effort and be in control of our legal spend. Outside counsel need us, as we them. And if our sales and marketing folks can discuss cost of delivery and value with our corporation’s clients, then we in the Legal Dept. can and need to do the same. We look at legal matters in a manner similar to the way projects come in for design. For the design work, the client expects to pay a reasonable fee, usually fixed, with some ability to adjust if circumstances warrant. We operate the same way with our arrangements with outside counsel. If you haven’t started these types of discussions with your outside counsel, you need to. And if you need assistance, you need to speak with Susan.

Thanks, Dennis – it’s always great to see a small law department leader right on top of these issues … too often, small department CLOs assume that value practices are only available to clients with more leverage … they assume such practices can’t be scaled to match a smaller budget or staff. But there are plenty of ways that smaller departments can exercise greater control and deliver improved service value – and clearly, they are more nimble and flexible than many of thelr larger department peers. One way is to work with firms that have developed value practices for larger clients: simply ask them to apply these practices to your work, too. You might be surprised how accommodating firms are to these kinds of requests since they’ve already created the wheel. And working within groups like ACC, small department leaders can also network with each other, and collaboratively share what they’re doing that works. Hope to see you again, soon, Dennis – and thanks for the nice post! -S

Susan – you know what’s truly fascinating? I have never gotten a single response or comment about my annual note to the firm — and 2012 was no different! I’m fearful that what I call my 4 rules of human existence might apply:

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Legal Executive Leadership’s principal, Susan Hackett, is, quite simply, not only one of the most knowledgeable experts on the legal profession, particularly in-house legal departments and law firms, but also the most innovative problem-solver I know. She is THE “go to” person for the thought leaders and change agents in the legal profession.